India and Nepal on Tuesday inaugurated the 69-km Motihari-Amlekhgunj oil pipeline. Prime Minister Narendra Modi and his Nepalese counterpart KP Sharma Oli switched on the pipeline from their respective offices in New Delhi and Kathmandu.

The pipeline, which will be protected by the Nepal Army on its side of the border, will now be used to supply diesel from Bihar’s Motihari city in the first phase. The pipeline, which was initially pegged at Rs 275 crore, eventually cost Rs 325 crore.

The pipeline is expected to help the landlocked Himalayan nation to meet its energy demands and reduce the cost of fuel transportation.

About Indo-Nepal pipeline

The Motihari-Amlekhgunj oil pipeline, which was first proposed in 1996, finally edged closer to reality during PM Modi's visit to Kathmandu in 2014.

After Modi's 2014 visit, the two governments inked an agreement to execute the project in August 2015. However, the construction got delayed due to an earthquake in Nepal and political tensions, including the so-called “economic blockade” of Nepal.

The Indian Oil Corporation (IOC) in 2017 signed a petroleum trade agreement with Nepal to supply it with about 1.3 million tonnes of fuel annually. Besides this, the IOC promised to double the supply by 2020. In July, the two countries conducted a successful trial of the pipeline.

The 69-kilometre pipeline, which was constructed by India in 15 months, will transport fuel from Barauni refinery in Bihar to Amalekhgunj in southeastern Nepal.

As of now, India transfers petroleum products to Nepal through tankers as part of an arrangement which has been in place since 1973.

How it will benefit Nepal

The Nepal Oil Corporation (NOC) hopes to save INR 2 billion annually in the freight of petroleum products. Apart from this, the pipeline is expected to save millions of rupees on account of reduced leakage of the fuel.

According to reports, the fuel depot in Amlekhgunj will have the capacity to store up to 16,000 kilolitres of petroleum products.

India’s Ambassador to Nepal Manjeev Singh Puri in July had described the pipeline as a “game-changer for Nepal”. “The Motihari-Amalekhgunj pipeline will help in tackling the oil storage problem in Nepal and doing away with the transportation of petroleum products through tankers. It will ensure smooth, cost-effective and environment-friendly supply of petroleum products to Nepal,” PTI had quoted Puri as saying.

Importance of the pipeline for India

There was a perception among a section of Nepalis that India was behind the five-month “blockade” of the Indo-Nepal border from September 2015 to February 2016, which caused hardship to common Nepalis. In its aftermath, China attempted to ramp up its cultural and economic ties with Nepal. Since then, however, relations between Delhi and Kathmandu have progressed at a steady pace. With the inauguration of the pipeline, India is aiming to further cement ties with Nepal amid China's relentless efforts to increase its strategic and economic footprint in the Himalayan region.

EXPLAINED: What is the Rs 325-crore India-Nepal pipeline, and why is it significant?Description:India’s Ambassador to Nepal Manjeev Singh Puri has described the pipeline as a “game-changer for Nepal”.ET Now Digital